Analyst Expects Derisking Required Ahead Of Patent Expiry For This Large Pharma/MedTech Stock

Credit Suisse has initiated coverage on Johnson & Johnson JNJ with a Neutral rating and a price target of $170.
The analyst says that the company, led by new management underway to transition to a more innovative, higher growth, and more nimble business.
He sees value in the Consumer separation (Kenvue), expected 2H23, which should drive improved valuation for the remaining businesses.
The analyst also notes increasing pressure on dividend growth, which has been a driver for the stock due to the separation and the need to retool the Pharma pipeline through R&D or M&A.
Related: Johnson & Johnson Expands Cardiovascular Portfolio, Bets $16B In Abiomed's Heart Failure Devices.
While mid-term sales and earnings growth of the new JNJ will likely be higher, it remains significantly below Pharma peers given the patent expiries of Stelara, Simponi, and Xarelto from 2023.
There could be potential upside from the big five pipeline products, which Credit Suisse forecasts below company expectations of $5 billion each.
But positive derisking data would meaningfully increase low-single-digit growth expectations in the longer term.
Price Action: JNJ shares are up 0.39% at $175.55 on the last check Friday.

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